"We had a great, first-class orchestra with a second-class capital structure."

The Cincinnati Symphony Orchestra's announcement on Thursday that it has raised $26 million for its endowment was the pinnacle of a strategy that began six years ago in backstage offices.

In 2009, the orchestra was pondering its existence. With Thursday's news, the CSO's status as one of the great U.S. orchestras was assured.

"I believe that we can make the claim that we are the great success story of American orchestras," orchestra president Trey Devey told the audience in Music Hall on Thursday.

The $26 million in gifts from 26 local families, individuals and foundations will allow the orchestra to hire 14 new players over the next five years. The hiring will increase the orchestra's players by 18 percent, restoring the ensemble to 90 full-time, tenured musicians.

And because the campaign goal was exceeded by $6 million, officials will also be able to tackle financial issues that have dogged the orchestra for most of the past decade.

The fundraising news coincides with a new, five-year agreement with its musicians that will expire in 2020, at the end of the CSO's 125th anniversary season. CSO musicians are the 10th highest paid among American orchestras.

But filling the players' seats, left vacant through attrition, was not the first item on Devey's agenda when he arrived as president of the organization in 2009. Those initial steps were all about survival.

Most people don't know that ticket sales make up only a fraction of the cost of running a major symphony orchestra. An orchestra must rely upon a mix that includes support from donors, foundations, grants, tickets and other sources of revenue and by drawing small amounts from its endowment for daily operations.

When Devey arrived, "we had a great, first-class orchestra with a second-class capital structure."

The orchestra was contemplating a drastic downsizing of its players, as well as its season. Financial issues were mounting. Most pressing was an underlying imbalance between revenues and expenses – or a structural deficit – which at its peak was $6.5 million. The orchestra also had a huge pension liability, something that challenges institutions and cities around the country.

The CSO was exhausting its operating cash, and taking nearly 10 percent from its endowment to cover daily operations. Management was unable to make payroll, and it established a line of credit to do so – a fact that was previously undisclosed.

The Great Recession also wreaked havoc on its endowment – gifts from donors that are invested and typically used to provide income and ensure that the orchestra will survive for future generations to enjoy.

When the endowment began to shrink as the stock market fell, it was a critical moment – because the orchestra was also eating away at the principal to pay for operations. From 1999, the value of the endowment adjusted for inflation plummeted 53.1 percent to $56.2 million in 2009.

At the end of the 2007-08 season, the orchestra's annual operations were $3.8 million in the hole. A line of credit was maxed out at more than $4 million, and the orchestra had borrowed another $4 million from its endowment.

Then came a long European tour, without a major sponsor. The CSO returned home with rave reviews – and another $800,000 in the hole.

"When I came on board in January of 2009, this great organization was in financial crisis," said Devey. "We were using a line of credit to meet payroll obligations and that option was running out. In my very first days on the job, we convened with the musician leadership and together we developed a plan to stabilize the CSO's budget."

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Tim Maloney (left), president of the Haile Foundation, and Trey Devey, president of the Cincinnati Symphony Orchestra, stand in front of Music Hall last summer. The men were part of the planning team for Lumenocity 2014.(Photo: Enquirer file)

It serves chiefly to support the orchestra, but supports other arts organizations, including Cincinnati Opera and Cincinnati Ballet, as well. Held by Greenacres Foundation, the fund has grown to nearly $118 million and adds $3.5 million to the orchestra's bottom line each year.

To establish credibility with his donors, Devey had already begun a "stabilization plan," which included concessions from the musicians union that reduced operating costs by $2.8 million.

Then there was another crisis two years later. The underfunded pension had "blown up on us," Devey said, and millions of dollars in payments were due in the coming year. A contract extension with the musicians – and more philanthropy – eliminated the $10.6 million problem.

As the books were balanced, donations began to roll in. More and more people flocked to symphony and Pops concerts. Still, Devey acknowledges that challenges lie ahead. Chief among them: The orchestra must figure out how to keep its audience for a season while Music Hall is closed for renovation. Construction is expected to begin in June 2016.

When Devey presented his case to the board of directors' executive committee about a year ago – February 2014 – longtime supporters Bill and Sue Friedlander were impressed. In the mid-'90s, the couple had co-chaired the orchestra's Second Century Fund campaign, which raised $45 million – considered at the time to be the largest amount ever raised for an arts organization in Greater Cincinnati. Mr. Friedlander died in September, 2014, but not before he had made a commitment to this campaign.

"It was so well-thought out, and believing in our CSO as strongly as we did, it was a no-brainer. I do believe everyone who has committed to this endeavor feels the same way," Sue Friedlander said.

Support for CSO continues with new set of donors

These gifts of $26 million from more than two dozen families, individuals and foundations offer a sign that Cincinnati will continue to support its arts and culture, even though generous patrons of the past, such as Mrs. Nippert and Patricia Corbett, are now gone.

And this news comes on the heels of last week's announcement that Cincinnati's Lindner family is donating $10 million to help renovate the orchestra's home, Music Hall. The $125 million project has now raised $55 million in private philanthropy.

Keeping Cincinnati's cultural assets vibrant is important, not only for those who love the arts, but for those who live, work and play in this region, believes Timothy Maloney, president and CEO of the Haile Foundation.

"A world class symphony contributes to the economic success of this region and is important to the attraction and retention of talent," he said.

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